There Will be Less Domain Development

When I was on WebmasterRadio.fm, I was asked to make domain industry predictions for 2009. I hate making predictions, but one of my off the cuff answers was that I thought there would be less development by domain investors by the end of 2009 than there is now. Although this contradicts what has been going on throughout the past several months, I’d like to explain my thinking.

With PPC revenue down and UDRP complaints against generics/acronyms seemingly at an all time high, domain investors at all levels have been moving towards developing their domain names. Some people are using mini site services like aeiou.com or SiteGraduate.com, other people are using companies like WhyPark to build a continually updated site, others are hiringgreatdevelopers to build websites, and others have been working on their own to build out their sites. Development has been the main theme or at least a big talking point at all the domain conferences since late 2007 and early 2008.

The one big problem/obstacle is that development is hard work. Sure, a 5 page mini site will get indexed vs a parked page which typically won’t, driving organic search traffic to the site. However, to really make good money and a solid ROI, I think more than 5 pages are needed to capitalize on the long tail in addition to the lower hanging fruit. Since most competitive keywords and key phrases have considerable competition from fully developed and deeply rich sites, a great domain name usually needs more than just a mini site to see strong results. My mini-sites that do well started off as mini sites, but I also took time to add content.

This being said, the people who have been spending time and money developing are realizing just how difficult it is to make a good return on investment, and some will throw the towel in and either stop developing and building their sites or slow the pace at which they were going. I think we will see this happen towards the end of 2009. People will still be developing their best domain names, but I don’t think it will happen at the same rate that it has happened the last few months.

Again, I repeat, development is hard work. A great domain name doesn’t need to be developed to make money, but development will usually bring in more money and traffic. The domain owner needs to determine whether it’s worth the money and time to do this. Ultimately, I believe people who have been spending money developing “brandable” domain names will realize that they aren’t bringing anything special to the table, so they aren’t generating a positive return on their investment, while owners of great generics slowly realize that development is more effort than they initially thought.

There are great options out there to develop good domain names. However, it takes time and effort to grow websites into revenue generating websites, and I don’t think all domain investors will have the desire to do this.

About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.

I’m surprised at your opinion here, but hey, you’ve got more experience with development than me.

I’m curious if you’re reaching the $0.15/day you kind of targeted back in the catshark minisite experiment?

***UPDATED BY ELLIOT***

I am not making that much a day, but there is some search engine traffic. I have made more than registration fee (a few times registration fee), but it’s not a lot of money. I’ve learned that creating pages on Burbank.com and Lowell.com are more important than an experiment like this, and those pages will ultimately lead to more valuable traffic.

I’ve been thinking to develop some nice 2-3 word .net generic domains which perhaps would be more difficult to sell to an end user (promote the .COM and one-word domains). Thanks for the reminder to keep development plans in perspective.

I think the crux of the issue is in this phrase “the people who have been spending time and money developing are realizing just how difficult it is to make a good return on investment”.

I think that as domainers get a bit more accustomed to development they can have a realistic goal when they start a new development project. I’m guessing that the first time folks do this they are not sure how much they should build or what they’ll get out of it. After one or two cycles hopefully you have a better feel for it.

Getting back to a good ROI though, there are a lot of options there. Maybe it is just covering reg fees on domains that currently don’t do that. Maybe it is getting 2x your parking revenue. Lot’s of ways to define success, but with a bit more info I don’t think people will walk away from the process, just set better, more informed goals.

Elliot,
I completely agree. Not only is it hard to develop the website, SEO, marketing, link building, generating revenue streams and other skill sets are needed.
I think people will jump into development either themselves or by paying for it and then realise that the job is only started. I think we will find a lot of developed websites turning out only pennies because they dont know how to leverage their asset to make money and beat the competition.
Those with more cash may farm out the SEO, link building and marketing and then start gaining the appropriate rewards if they manage it correctly. The rest of the websites will linger.
Actually those websites that linger may be good future investment opportunities for those who know how to do SEO etc. Even now thats where I see most of my money come from i.e. redevelopment and optimization of sub-optimal websites.

good post and i like how you said mini sites were mini sites and eventually grew outside of mini site term like your tropicalbirds.com

developing things are hard work, you need a game plan and a great web guy(which you have now)… map things out, map out how meta tags are going be up, logo, color and the list goes on and on…on top of things, you need to remind yourself of a “budget” and how its going be a business.

congrats and your headed in the right direction. one day at a time, some of the days are bumpy, you learn from your mistakes and move on..

back to your mini site idea: they do offer a lot of great things for beginners and a wonderful roi… sure you may not make 50k off tropicalbirds.com in a given year but that 5 dollars to 10 dollars a day adds up very fast and its a nice cash flow site. if you can find a great content writter, add your own pagers, or do some of the work yourself its going save some cash and more money in your pocket.

obviously, your main points of interest now are the geo market and 2 nice sites… you will be going out to burbank, meet local business people, show off your site… you can go into a business cold feet and say hi im the founder of burbank.com with a smile to the reception desk and ask for there boss. when people hear a term like burbank.com, they know your the real deal, succesful and that name brings eye balls to the site vs a site hi im elliot from burbank-cali.com or something like that which looks odd on paper and even hearing.

enjoy 09 and you worked hard where your at now. i wish i was in your position and im a rookie at heart but expanding things slowly.

I agree there will be LESS Domain Development and MORE Business Development.

if you look, you will notice there are some very nice sales going on of non-premium domains being sold on very nice looking websites (premium themes).

there are also premium domains being developed (installed) on sub-premium themes (the ones you get for free)

In business its not only about location,location, location, but also presentation , presentation, presentation.

The winners of 2009 will be those who put the two together, location + presentation, the ones who make a statement will develop premium domains on premium themes, they will not build websites, or mini-sites, they will build monuments, and to do that they will get the best, whatever it takes …

I agree development is hard work as I’ve spent the past year working my ass off. But most of the really hard work is just like in real estate developing, in the initial construction and building phases. Once you get systems in place, get through all the experiment phases with what works and doesn’t work, and get some successful sites, it gets much easier as long as you have a good network management and marketing system in place.

And next you don’t just make money through click ads on sites. There are a lot of other more powerful and innovative ways to make way more money with developed domains vs. undeveloped domains. I’m not going to discuss any of them because too many others have been copying what myself and other of the pioneering developers have been building and doing. And to be candid if domainers don’t see the light and go back to the ridiculously limited ppc landing page monetization model that makes things less competitive and more lucrative for those of us that have seen the light and are building and creating.

Developing websites into major revenue sources takes time and effort. But planning brings this effort down. First step is to realize you are developing a business model altogether.
If a website is developed keeping in mind that it is a targetted business your looking at, more realistic time and effort estimates can be made and thus a timeline can be set.
In any case, developing websites would definitely help survive the *recession* wave.

Many will realize that development may not work unless some good ‘ole hard work is mixed in there…. Now with the search engines, particularly Google, are being pickier than ever, development could be less effective than most are expecting. I predict, many will spend countless hours, days, and maybe months developing mini-sites that wind up making less than expected. It’s a good time to build a few of your best names into businesses.

What you didn’t cover was the fact that if you aren’t putting at least SOME relevant content on your domains, and you’re leaving them to rot on some parking service with landing pages of adlinks, your domains won’t build ANY value at all. SE’s do NOT index landing pages. Period.

If you don’t have a typein domain, longtailed or not, but it’s a generic brand niche domain you believe in, then you ABSOLUTELY NEED to have relevant content on the domain to get a chance for SE indexing. Once your domain is indexed on a search engine, the domain value doubles, at the minimum.

So, most domainers in 2009 will make the decision: “Do I try to sell my domains I can’t afford to hire web design teams to develop, or do I just let them expire, or do I spend a one-time fee of $.99 per domain at Whypark.com to at least get RSS and other content feeds on them to establish their existence and indexing by search engines, thereby increasing their resale value?

If a domainer has a list of domains they believe in, but they can’t monetize them through parking services (which are based on typein and backlinks), then the domainer needs to make the decision to keep, sell or release those domains. If you have 1000 domains that aren’t making money at a parking service, then sign up for a discounted bulk account at Whypark, where you can get all your domains parked with relevant current content for less than a dollar per domain.

After you do that, you can follow your domains’ performance, and decide to invest a few dollars more into the domains you see showing promise. I think your readers would be amazed at how little it costs to build out nice-looking, content-rich websites if they knew where to go.

As a mini-site and parking developer you forgot to mention VentureNames.com, who are VERY up and coming in this game. I have many domains with them for sale using their AdSense parked templates which IMO are excellent!

It’s been fairly obvious that development is the way forward since PPC rev started dropping a few years ago, I think Google is probably one of the highest paying anyway at the moment and probably still will be in years to come..

I don’t think it’s really important whether it’s a five page site, a hundred page site, or what. The important part that domainers in general are overlooking is that a website needs to be marketed. I don’t think it makes sense at all to build a nice website and not work to drive traffic to it. Perhaps there are a few domains which get enough type in traffic that building a nice site to convert at a higher rate is a worthwhile investment, but for 99.9% of domains, that is not viable. For most domainers, developing sites for all of the domains in your portfolio would be very unwise.

Having said that, I do highly recommend domainers to get their feet wet in developing websites. I don’t AT ALL recommend anyone get into the low quality type of website development. Whether it’s a poor quality design, or nearly unreadable content, I see time and again domainers throwing away money with these sub-par development companies. Just don’t do it. Take the time, or make the investment, in developing a high quality site. One that you’d be proud to own. Then, invest in promoting the site so actual people come to visit it. If you’re budget is so low you can only afford crap, take the time to do it yourself. If you don’t have either time or money, just keep the domains parked, or sell them.

I agree with you on your prediction for 2009, however, with that said, I still think a very important point is being over looked.

The key to domain development is go further than creating mini-sites or large content websites.

Instead, domain developers should be approaching domain development in the same manner regular business ideas are approached.

Think of real business concepts outside of ppc, affiliate marketing or any other type of similar monetization.

Build it like a real business and operate it like one.

This means that you might only be able to approach one or two good domain development projects per year.

That’s ok

I truly believe the winners in the domain development game will be the ones that shift their perception of what has been described as domain development, to a view of creating real business concepts on top of their domains.

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